Microsoft 365 has become the default productivity platform for global organizations, integrating tools like Teams, SharePoint, Outlook, and now, Microsoft Copilot. Today, over 70% of Fortune 500 companies also use Copilot to boost productivity
As Copilot pulls data from across your Microsoft 365 environment, it can surface more than just relevant information. Without clear governance and data loss prevention (DLP) policies, it may inadvertently access or share sensitive content like customer personally identifiable information (PII), internal financials, or regulated health data.
In 2024, 79% of organizations experienced at least one cloud data breach, and nearly half (47%) of leaked corporate data was classified as sensitive. Importantly, many of these incidents weren’t caused by threat actors—they stemmed from misconfigured access or accidental sharing.
This article outlines a modern approach to DLP using Microsoft Purview, explaining how to classify, protect, and monitor sensitive data across Microsoft 365 before it becomes a liability.
What is Microsoft Purview – And Why it Matters for Data Loss Prevention
In most organizations, sensitive data is scattered across Teams, SharePoint folders, shared drives and cloud applications. Managing this data without a unified view is inefficient and securing it is even more difficult.
Microsoft Purview gives you the tools to govern, protect, and manage your data across Microsoft 365. It provides visibility into how information is stored, accessed, and shared, eliminating the guesswork that often leads to compliance risks.
With Microsoft Purview, you can:
- Discover and classify sensitive data using automated intelligence.
- Assess risks and map data flows across departments and content types.
- Address compliance requirements with preconfigured or custom policies.
- Control access and monitor usage across your Microsoft 365 environment.
The result is a simplified approach to managing data security and governance, designed to scale as your organization grows.
Microsoft Purview focuses on three key areas:
- Data security to protect against unauthorized access and oversharing.
- Data governance to establish policies, assign ownership, and manage the content lifecycle.
- Risk and compliance management to support regulatory frameworks such as HIPAA, GDPR, and ISO 27001.
Data Security
Managing sensitive data is no longer just about defending against external threats. Increasingly, risk comes from within through overexposed documents, misconfigured permissions, and unmonitored user behaviour.
Microsoft Purview gives you a comprehensive set of tools to reduce your risk exposure and improve visibility into how data moves across your organization.
Key capabilities include:
- Data Loss Prevention to block unintentional sharing of sensitive data across Microsoft 365.
- Information Protection to classify, label, and encrypt content based on sensitivity and usage context.
- Information Barriers to control communication between users or groups with regulatory or ethical separation.
- Insider Risk Management to detect and investigate risky behaviour within your organization
- Privileged Access Management to restrict and monitor access to high-value systems and information
- Data Security Investigations (preview) to trace the flow of sensitive data during potential incidents
- Data Security Posture Management (preview) to assess and improve your current data security configurations
Data Governance
As your organization adopts more platforms and tools, your data footprint expands across environments—Azure Storage, Power BI, SharePoint and more. Without governance in place, this sprawl leads to inconsistent access, weak ownership, and increased risk.
Microsoft Purview delivers a unified approach to data governance. It gives you the structure needed to track where data lives, understand how it’s used, and assign the right policies to protect it. Rather than managing data source by source, you gain centralized oversight across your entire data estate.
Core tools include:
- Data Map to scan and register your data sources in a centralized environment.
- Unified Data Catalogue to make curated, trustworthy data easily discoverable by users.
- Access Controls to manage who can view or edit sensitive content across platforms.
- Usage Tracking to monitor how data is consumed and inform future policy updates.
Risk and Compliance
For many organizations, staying compliant goes beyond just ticking boxes; it’s about proving that data is handled securely, responsibly, and transparently.
Microsoft Purview equips you with the tools to meet compliance obligations and reduce risk by maintaining oversight, automating enforcement, and responding quickly to investigations or audits.
Core tools include:
- Audit to monitor and log user and admin activity across Microsoft 365.
- eDiscovery to identify, preserve, and review data for internal or legal investigations.
- Communication Compliance to detect policy violations in Microsoft Teams, Exchange, and other services.
- Data Lifecycle Management to enforce retention or deletion policies based on regulatory or business needs.
- Compliance Manager to assess your compliance posture and provide recommended actions aligned with industry frameworks.
How to Implement Data Loss Prevention in Microsoft Purview
Microsoft 365 includes built-in Data Loss Prevention (DLP) capabilities that help you detect, monitor, and protect sensitive information across services like Outlook, SharePoint, OneDrive, and Teams.
Step 1: Identify and Classify Sensitive Data
Start by identifying sensitive information that exists across Microsoft 365. Built-in templates can help you detect data types like credit card numbers, health records, or national IDs. If your organization uses custom formats, you can define your own data types to extend coverage.
Once your sensitive information is discovered, classify it using sensitivity levels such as public, internal, confidential, or restricted. These classifications form the basis for your enforcement policies.
Step 2: Understand How Teams Use Data
Before you configure DLP, work with department leads to understand how different teams handle sensitive information. This helps you tailor policies that reflect actual workflows.
Use this insight to define what should trigger alerts, warnings, or blocks when data is shared inappropriately.
DLP policies can be configured to:
- Quarantine flagged content or hide it from apps like Teams
- Block sharing entirely when stricter controls are required
- Allow overrides with justification in approved scenarios
- Display alerts when users take actions that violate policy
- Identify sensitive content using built-in or custom policies
Step 3: Create Your DLP Policies
Using Microsoft Purview, set policies that apply to the services where data risk is highest—such as financial data in accounting or personal information in HR. You can build custom rules or start with Microsoft’s predefined templates.
Microsoft Information Protection supports this process with:
- Over 100 types of sensitive information
- AI-driven labelling and content classification to ensure consistency
- 40+ policy templates aligned with regulations like HIPAA, GDPR, and PCI-DSS
Apply these policies where they matter most. For example, you might block external sharing of payroll data or restrict access to internal reports containing client records.
Step 4: Train and Inform Users
Technology alone won’t stop data loss. Your users need to understand how DLP works and what is expected of them.
Support adoption with training sessions that use applicable scenarios and messaging that reinforce shared responsibility for data protection.
The goal is to create a culture where users understand their role in protecting information and are confident in handling sensitive information.
Step 5: Implement and Test Policies
Once policies are configured, test them in real-world scenarios. Use tools like the Activity Explorer to simulate data loss attempts and observe how the system responds.
Assess whether:
- The right content is being flagged
- Users are encountering unnecessary friction
- Alerts and blocks are functioning as intended
Gather user feedback to identify confusion or resistance and adjust your rules for a better balance between security and usability.
Step 6: Monitor and Respond to Violations
After deployment, it’s important to continuously monitor how your DLP policies are performing. Microsoft 365 provides built-in reporting tools that help you identify potential risks and validate whether your rules are working as intended. Start by setting up alerts that notify your team of unauthorized data sharing, repeated policy violations, or unusual access behaviour.
To gain deeper insight, use reports such as DLP Policy Hits Over Time to track trends or identify seasonal spikes, Top Sensitive Information to pinpoint the data types most frequently flagged, and DLP Activity Explorer to monitor sensitivity label changes, rule triggers, and data leaving the organization.
This level of visibility allows you to fine-tune policy enforcement and strengthen your overall protection strategy.
DLP Activity Explorer: Visibility in Action
The Activity Explorer provides a 30-day view of how sensitive data is being handled across your environment. It helps you investigate incidents and identify weak points in your configuration.
Key filters include:
- Files containing sensitive info types like credit card numbers or health records
- Endpoint DLP activities to monitor file movement on user devices
- Egress activities to track data leaving the organization
- DLP policies and rules that triggered actions
This tool helps your team take proactive action before a minor violation becomes a major breach.
Conclusion
Microsoft Purview 365 Data Loss Prevention marks a shift in how organizations approach information security. Instead of relying solely on perimeter-based controls, DLP focuses on protecting data at the source by considering its sensitivity and how it is used across cloud apps, email, storage, and collaboration tools.
At CrucialLogics, our approach is built on helping you secure your Microsoft environment using the tools you already own. To learn more about deploying Microsoft 365 DLP with Purview, speak with us today.
